Your Right to Know

WASHINGTON — The Obama administration yesterday issued its long-awaited final rule on what
states and insurers must do to provide the essential health benefits required in the individual and
small-group market beginning in 2014 under the health-care reform law.

The mandate, a cornerstone of President Barack Obama’s plan to enhance the breadth of
health-care coverage in the United States, allows the 50 states a role in identifying benefit
requirements and grants insurers a phased-in accreditation process for plans sold on federal
health-care exchanges.

Yesterday’s rule included few changes from past administration proposals, a fact that could help
states and insurers as they prepare for new online state health-insurance marketplaces, known as
health-care exchanges, scheduled to begin enrolling beneficiaries for federally subsidized coverage
on Oct. 1.

“The administration has been consistent in its approach to essential health benefits for more
than a year, and that continued today. It’s good news for states and insurers because it means they
don’t have to make any changes,” said Ian Spatz, a senior health-care adviser at the consulting
firm Manatt Health Solutions.

The exchanges are expected to cover as many as 26 million people within 10 years and seem likely
to dominate individual and small-group insurance markets. Another 12 million people are expected to
receive health-care coverage through an expansion of the Medicaid program for the poor, according
to the nonpartisan Congressional Budget Office.

Obama’s Patient Protection and Affordable Care Act sets out 10 benefit categories that must be
covered by most plans at the same level as a typical employer plan. The categories include
hospitalization, prescription drugs, and maternity and newborn care.

The rule got a cool reception from insurance and employer groups, which warned that higher costs
could result from the new coverage requirements.

“The minimum essential health-benefits standard will still require many individuals and small
businesses to purchase coverage that is more-comprehensive and more-expensive than they choose to
purchase today,” said America’s Health Insurance Plans President Karen Ignagni.

Neil Trautwein, National Retail Federation vice president, said the ultimate impact of the
regulation will not be felt until plans are priced and sold on the market.

“The administration has tried hard to navigate between the competing concerns,” he said. “But I’m
worried that people won’t be able to afford coverage.”

Insurers including UnitedHealth Group Inc., Aetna Inc. and Cigna Corp. will use the government’s
final word on these required benefits as they design plans and set premiums before the exchanges
launch. They each will sell plans on some of the exchanges but have not yet committed to which
ones.

The U.S. Department of Health and Human Services said the rule would mean greater access to
mental-health and substance-abuse services by requiring parity with other health-care benefits.

The final rule preserved the state role in determining how the requirements are met by selecting
their own benchmarks from plans sold within their respective borders. Most states opted for their
home market’s largest small-group plan.

But after two years, HHS said it would review the situation and determine whether a new approach
might be necessary.

Also yesterday, Florida Gov. Rick Scott backed a limited expansion of Medicaid, joining six
other Republican governors who have agreed to the move under Obama’s health-care law.

Scott, a vocal critic of “Obamacare” who had balked at expanding Medicaid, agreed to the
expansion only after the federal government granted Florida a conditional waiver to privatize
Medicaid statewide.

The move could add at least 1 million people to the state’s Medicaid rolls. It must be approved
by the Florida Legislature.